Understanding The Types of Child Support Available in San Antonio Family Law.
Texas Child Support History
In the practice of San Antonio family law, child support has almost become an after-thought; a formulaic certainty that often does not make the top five problems in a divorce case. However, there are plenty of statutes in the Family Code that can make child support considerations more interesting, and not just for the high-income cases.
Also, it seems as though a trend in Texas family law is possession orders that vary significantly from the Standard Possession Order. Inevitably, as soon as a 50/50 possession order is discussed, nearly every time the next question from the client is, “how will this affect child support?”
The Texas child support statutes have not changed significantly since being enacted, and certainly not since the recodification in 1995.
Analyzing What Income Counts Towards Texas Child Support
Before knowing the types of child support options available in San Antonio, it is important to understand how the Texas courts determine what income goes towards child support. If the party ordered to pay child support has monthly net resources then a percentage of that income will go towards the child support. If not, other options are available.
If a party ordered to pay child support has non-income producing property, the court may be able to deem income from that property.
“When appropriate, in order to determine the net resources available for child support, the court may assign a reasonable amount of deemed income attributable to assets that do not currently produce income. The court shall also consider whether certain property that is not producing income can be liquidated without an unreasonable financial sacrifice because of cyclical or other market conditions. If there is no effective market for the property, the carrying costs of such an investment, including property taxes and note payments, shall be offset against the income attributed to the property.
The court may assign a reasonable amount of deemed income to income-producing assets that a party has voluntarily transferred or on which earnings have intentionally been reduced.”
Texas Family Code § 154.067
Net Resources of a Spouse
It is generally understood that a new spouse’s income cannot be considered in calculating child support. However, Texas Family Code § 154.069 simply states that the “court may not add any portion of the net resources of an obligor or obligee in order to calculate the amount of child support to be ordered. Nevertheless, this does not mean that a spouse’s income or financial status cannot be considered in overall child support considerations.
Types of Child Support in San Antonio Family Law
There are five different methods of support that the court is authorized to order. 90% of the time the court will only order periodic payments.
The Texas Family Code specifically provides that the Court may order that child support be paid by:
- Periodic payments
- A lump-sum payment
- An annuity purchase
- The setting aside of property to be administered for the support of the child as specified in the order
- Any combination of periodic payments, lump-sum payments, annuity purchases, or setting aside of property
There are many occasions where a Texas family attorney may consider a lump-sum payment of child support to be more useful or appropriate than monthly periodic payments.
For example, in Walsh v. Walsh, the Waco Court of Appeals upheld the trial court’s decision to award a lump sum of child support. There, the obligor had been ordered to make periodic payments at the time of the divorce. After that court order, the obligor was in a car wreck and it was determined that he would be bed-ridden until his eventual death. Further, the award was upheld on the basis of old Family Code language that was not quite as straightforward as the current statute. Based on the Walsh case, it may be appropriate to consider a lump-sum child support order when the obligor may not be able to earn adequate income because of an injury and the obligor has received some sort of compensation sum based on the injury.
Further, the award was upheld on the basis of old Family Code language that was not quite as straightforward as the current statute. Based on the Walsh case, it may be appropriate to consider a lump-sum child support order when the obligor may not be able to earn adequate income because of an injury and the obligor has received some sort of compensation sum based on the injury.
Another situation that might be ripe for a lump-sum payment is when the obligor receives a severance package, merger bonus or any other large income payment.
Annuity purchases and setting aside of property are similar in nature. The difference is that there appear to be no Texas family law cases on annuities, indicating that it is rarely if ever, ordered by the court.
However, since early Texas jurisprudence, courts have set aside property for the benefit of the family. Although it is not done often, it is done, and primarily when there is not enough regular income to cover periodic payments.
Payment of Support by a Trust
Texas Family Code § 154.005 provides San Antonio family lawyers a method by which the court can order a trustee to make child support payments from the disbursements of a trust in one of two ways.
- The court may order the trustees of a spendthrift or other trust to make disbursements for the support of a child to the extent the trustees are required to make payments to a beneficiary who is required to make child support payments as provided by this chapter.
- If disbursement of the assets of the trust is discretionary, the court may order child support payments from the income of the trust but not from the principal.
Texas Child Support Interest
Interest on past due child support has been established as a matter of right back to the date of delinquency.1
“A child support payment not timely made constitutes a final judgment for the amount due and owing, including interest. . .”Texas Family Code § 157.261(a)
“[A]ccrued interest is part of the child support obligation and may be enforced by any means provided for the collection of child support.”Texas Family Code § 157.267
This provision of the Family Code also codified the foregoing cases.
- Medrano specifically held the trial court does not have the discretion to reduce interest and the obligee is entitled to interest “as a matter of right.”2
- Castle, specifically held that “[a]ccrued interest is clearly part of the child support obligation.”3
These cases concur with the general rule that prejudgment interest should be granted to a prevailing plaintiff.4
Clarifying The Texas Family Code for Child Support Interest
HB 678, clarifying Texas Family Code § 157.265, was unanimously passed by the House and the Senate without one dissenting vote in the 2005 legislative session.
The bill specifically provides child support arrearages (past due child support) in existence on January 1, 2002, that were not confirmed and reduced to a money judgment on or before that date, accrue interest as follows:
- Before January 1, 2002, the arrearages are subject to the interest rate that applied to the arrearages before that date.
- On and after January 1, 2002, the cumulative total of arrearages and interest accumulated on those arrearages described by Subdivision (1) is subject to Subsection (a), [ i.e., 6%].5
The bill analysis states that interest accrues at the “interest rate in effect at the time the child support payment became delinquent.” The Supreme Court specifically approved this language In the Interest of M.C.C., 187 S.W.3d 383 (Tex. 2006). The Supreme Court in Attorney General v. Lee stated the interest rate in the Finance Code applies to unpaid child support that became delinquent prior to the enactment of Texas Family Code 157.265 in 1991.6
Numerous Texas family law cases have held interest accrues on a child support obligation at the rate that is in effect at the time the child support obligation accrues.7
In 2009, the Legislature made another amendment which changed the effective interest rate.8 The order of application of a payment received was altered to apply to all principal first, including judgment principal, then to interest.9 The practical effect of the amendment lowers the effective interest rate by a couple of points, as the accelerated payment of principal shortens the life of the debt.
*This page is intended solely for residents of Texas or persons seeking representation in Texas.
1 Medrano v. Medrano, 810 S.W.2d 426, 427 (Tex. App.—San Antonio 1991, no writ); Castle v. Harris, 960 S.W.2d 140, 142 (Tex. App.—Corpus Christi 1997, no writ)
2 Medrano, 810 S.W.2d at 427
3 See also Castle, 960 S.W.2d at 142. In the Interest of M.C.R., H.M.R. and K.M.R., 55 S.W.3d 104 at 107, (Tex. App.—San Antonio 2001, no pet.)
4 Castle, 960 S.W.2d at 143. See also Wilson v. Woolf, 274 S.W.2d 154, 158 (Tex. Civ. App.—Ft. Worth 1954, writ ref’d n. r. e.) (interest on past due support back to 1954)
5 H. J. of Tex., 79th Leg., Reg. Sess. 3637 (2005)
6 Attorney General v. Lee, 92 S.W.3d 526, 528 (Tex. 2002)
7 In the Interest of M.C.C., a Child, 187 S.W.3d 383 (Tex. 2006); Coastal Industrial Water Authority vs. Trinity Portland Cement Division, 563 S.W.2d 916, 918 (Tex. 1978); In the Interest of A.R.J., 97 S.W.3d 833 (Tex. App.—Dallas 2003, no pet.); In the Interest of A.B.L., a Minor Child, (2003WL 21470071 (Tex. App.—Waco June 25, 2003, no pet.) (not designated for publication); In the Interest of Silas J. Hurd & Monique C. Hurd, Minor Children, 2003 WL 1961142 (Tex. App.—Amarillo 2003, no pet.)(not designated for publication); Thomas Conveyor Company vs. Portec Inc., 572 S.W. 2d 361, 363-64 (Tex. App.—Waco 1978, no writ); Tex. Fam. Code § 157.265
8 See Acts 2009, 81st Leg. R.S. Ch. 767 (S.B.865) Sec. 18, eff. 1/1/2010
9 Texas Family Code § 157.268